COVID Committee FINAL Report - Part 2

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Finding: Lackluster Oversight Resulted in Transnational Criminal Organizations and Fraudsters Stealing U.S. Taxpayer Money from Pandemic Relief Funds

International criminal organizations and foreign government-affiliated actors exploited the urgency of relief programs and orchestrated sophisticated fraud schemes that span multiple countries.

Chinese government-linked hackers stole at least $20 million in U.S. Government COVID-19 relief funds

• An USSS investigation revealed that hackers affiliated with the Chinese government, specifically identified as APT41, were implicated in theft of $20 million of U.S. Government COVID-19 relief funds

• APT41 has a history of fraudulent activity in the past, specifically traditional unemployment insurance fraud against SBA across dozens of states

• APT41 also has a history of espionage activities on behalf of the Chinese government, including attacks on pro-democracy politicians in Hong Kong and data breaches affecting more than 100 organizations

A Nigerian fraud ring stole $10 million in pandemic relief funds

• Mr. Abemdemi Rufai, a Nigerian government official, organized a large-scale cyberfraud scheme—named Scattered Canary—targeting COVID-19 relief funds

• Scattered Canary, a business email compromise operation, filed at least 174 fraudulent unemployment claims in Washington state and 17 in Massachusetts that were all accepted, all with an expected payout of $5.4 million

An Indian national stole $8 million in a COVID-19 relief fraud scheme

• A federal grand jury in Newark, New Jersey indicted an Indian national for submitting fraudulent PPP loan applications totaling more than $8.2 million

• The defendant submitted at least 17 applications on behalf non-existent companies, using false information about employees and payroll

• He also fabricated tax filings on behalf of a non-existent business to receive more relief payments

• He reportedly received $3.3 million in loan proceeds which he then laundered

Domestic and International Fraudsters that Stole from Pandemic Relief Programs were also Connected to Other Organized Crimes

• Fraudsters involved with stealing millions of dollars were also involved in other federal crimes including wire fraud and drug smuggling

• DOL IG has continued to connect abuse of UI relief funds to organized criminal groups

• The National UI Fraud Task Force was created to combat fraud of UI perpetrated by domestic and international criminal organizations, many of which include street-level criminal organizations with ties to illegal guns and drugs

• The U.S. Attorney's Office charged six individuals, including two Maryland State Department of Labor subcontractors, with participating in a conspiracy to fraudulently obtain $3.5 million in UI benefits

• The lead defendant now faces separate narcotics and firearms charges, including allegations that he unlawfully possessed a machine gun in furtherance of a drug trafficking crime

• Another convicted felon charged with CARES Act fraud also committed firearm offenses and possession with the intent to distribute fentanyl

• The U.S. Attorney's Office for the District of Maryland targeted cases with connections between COVID-19 fraud and individuals involved with violent crime, organized criminal networks, business email compromise schemes, and narcotics distribution

Flaws in Pandemic Program Oversight

The COVID-19 pandemic highlighted critical weaknesses in oversight measures to prevent waste, fraud, and abuse in federally funded emergency relief programs

• The PRAC was included in the CARES Act to support and coordinate independent oversight of pandemic relief spending

• Since April 2020, PRAC has worked with state and federal oversight agencies to oversee more than $5 trillion in federal pandemic relief emergency spending

Federal agencies, such as the SBA, USSS, Treasury, DOL, GAO, and HHS, were responsible for detecting and preventing fraud, waste, and abuse in pandemic relief efforts, though many of them faced challenges in carrying out this oversight effectively

• During the 118th Congress, the House Committee on Oversight and Accountability held hearings to expose the massive fraud in pandemic relief programs and how federal agencies were simply unprepared for the influx of domestic and international fraud

• Federal agencies failed to utilize tools to prevent fraud from occurring in the first place, resulting in billions of dollars lost due to improper payments

Federal Agencies Overseeing Pandemic Relief Funds were Needlessly "Siloed Off" from Each Other, Which Prevented Wholistic Tracking and Disbursing of Funds to Prevent Fraud

• Many domestic and foreign fraudsters used the SSNs of deceased individuals and federal prisoners to get unemployment checks

• These fraudsters were able to collect these checks in multiple states because federal loan applications were not cross-checked against a Treasury database that would have raised red flags about sketchy borrowers

The DNP Was Not 100 Percent Accurate and Lacked Sufficient Information to Cross-Check

• The DNP list includes individuals who are deceased and excluded from doing business with the government

• The full DMF contains death information SSA collects, including state-owned data, which is cross-referenced with SSA's records on individuals with SSNs

• This lack of access prevented PRAC from conducting a full investigation into fraudulent loan applications, leaving 5,097 fraudulent loan applications unable to be accounted for

The Social Security Act currently does not allow full death data sharing between the SSA and Treasury

• The Consolidated Appropriations Act of 2021 allowed the SSA to share, to the extent feasible, its full death data with DNP list only for a 3-year period

Federal Agencies Did Not Require and Failed to Validate Information Provided by Applicants to Properly Verify Eligibility

Emergency Rental Assistance program and SBA allowed self-certification for both PPP and EIDL loans

• This lack of verification contributed to an estimated $200 billion in fraud between both programs

• The SBA IG identified more than $120 million in loans and $24 million in grants to borrowers listed on the DNP list

The Department of Labor Allowed for Self-Certification of the Unemployment Insurance PUA programs, Straining the States

• During the PUA's first nine months of extended eligibility, claimants were able to self-certify their prior employment or self-employment without any documentation to receive funds

• More than $25 billion in PUA benefits were already paid out to claimants that provided insufficient information on their application

Federal and State Agencies Lacked Up-to-Date Financial Management Systems, Failing to Meet Federally Mandated Modernization Requirements, Leading to Billions of Dollars of American Taxpayer Money Improperly Paid or Stolen

• Integrated, functional, and secure data systems are essential for effective fraud and risk management

• Agencies' IT systems were unable to facilitate fraud detection and recovery

• Most federal agencies at the time of the pandemic still had legacy IT systems in place to catch and control improper payments

• Legacy IT systems did not have the ability to perform cross-matches for such a large volume of claims, posing a risk to claimants as their PII could become more easily accessible to criminals targeting UI

• Stolen PII also played a role in large-scale identity fraud during the pandemic, providing a source for fraudsters

The Implementation or Effectiveness of Any Federal Law or Regulation Applied, Enacted, or Under Consideration to Address the Coronavirus Pandemic and Prepare for Future Pandemics

Overreliance on the World Health Organization

The WHO is the most recognized global public health institution

• The WHO's mandate is to "act as the directing and coordinating authority on international health work" within the UN system

• The WHO's mission is "attainment by all peoples of the highest possible level of health"

The WHO failed to uphold its mission and caved to Chinese Communist Party pressure

• The WHO was misinformed, denied access to China, and was used as cover for CCP's reckless actions

• The WHO disregarded warnings from Taiwan of a burgeoning virus because of pressure from China

The WHO Ignored Taiwan Despite It Warning of COVID-19 in December 2019

• Taiwan notified the WHO as early as December 31, 2019, asking for more information about atypical pneumonia cases reported in Wuhan, but the WHO never followed up

The WHO Denied Human-to-Human Spread of COVID-19 Based Solely on CCP Propaganda

• On January 14, 2020, the WHO tweeted that "preliminary investigations conducted by Chinese authorities have found no clear evidence of human-to-human transmission of the novel coronavirus"

• This claim was based on the CCP jailing any doctor that disseminated information about COVID-19 that was not first cleared through state-run media

The WHO Prolonged Naming COVID-19 a PHEIC and Pandemic Because the CCP Insisted the Spread was Under Control

• By the time the WHO declared COVID-19 a PHEIC on January 30, 2020, the disease had infected almost 10,000 and killed almost 1,000 people in 19 different countries

• It was reported that the delay in PHEIC declaration was a result of intense pressure from the CCP

The WHO Delayed and Denigrated Serious Countermeasures, Like Travel Restrictions, Because of CCP Pressure

• Despite declaring COVID-19 a PHEIC and extensive evidence of transmission through travel, the WHO insisted other countries not restrict travel or trade to or from China

The WHO Continued to Praise CCP Failed Efforts to Combat the Pandemic, Despite a Globally Recognized the Cover-Up

• The WHO routinely praised the CCP's efforts to combat the spread of COVID-19 despite multiple reports that the CCP engaged in a massive disinformation campaign

The WHO Failed to Condemn the CCP's Aggressive Tactics Against Whistleblowers, Journalists, and Americans

• The CCP is known to silence or "disappear" dissenters, journalists, and researchers that go against the CCP's narrative

The WHO's Report Regarding the Origins of COVID-19 Was Incomplete, Misleading, and Parroted Chinese Communist Party Propaganda

The "Terms of Reference" for the WHO's investigation were inherently flawed and provided significant discretion to the CCP

• The terms dodged responsibility by "build[ing] on existing information and augment, rather than duplicate, ongoing [CCP]…efforts"

• They gave the CCP final right of refusal on the "composition of the international team"

The July 6 Report Was Not Independently Drafted by the New York State Department of Health nor Peer Reviewed

• Numerous Executive Chamber officials were involved with the drafting of the July 6 Report, including Ms. DeRosa, Ms. Lacewell, Dr. Malatras, Ms. Garvey, Ms. Baldwin, and Mr. Mujica

Mr. Andrew Cuomo Reviewed and Edited the July 6 Report, and His Edits Were to Make the Report's Findings More Causal

• Documents and testimony show that Mr. Cuomo was intimately involved in the review and drafting of the July 6 Report

Mr. Andrew Cuomo Was Involved in the "Peer Review" Process and Directed Individuals Outside of New York State Government to Review the July 6 Report

• Mr. Cuomo directed the July 6 Report be peer reviewed by Mr. Dowling and Mr. Raske

The Executive Chamber Decided to Remove Out-of-Facility Death Data from the July 6 Report

• The initial drafts of the report analyzed in-facility and out-of-facility nursing home deaths, citing the total nursing home deaths as approximately 10,000

• The decision to not include out-of-facility deaths occurred on a phone call on June 27, 2020

The World Health Organization's Draft "Pandemic Treaty" Does Not Solve the Organization's Underlying Problems and May Affirmatively Harm the United States

The WHO has no real authority to sanction or otherwise pressure its Member-States

• The only authority WHO leadership has to enforce compliance is via public pressure

The draft "Pandemic Treaty" does little to address any of the shortfalls revealed in COVID-19

• The draft contains definitions and principles, aspirational goals for improving pandemic preparedness and response capacities, and supply chain and logistics

There are specific U.S. concerns regarding enactment of any potential Pandemic Treaty

• There have been multiple closed-door negotiations resulting in large edits that are then presented to all Member-States

• It is unclear if this treaty will be ratified through the U.S. Senate or not

The Strategic National Stockpile Was Not Prepared to Address a Nationwide Viral Pandemic

Dating Back to the Obama Administration, the Strategic National Stockpile Was Not Prepared for a National Public Health Emergency

• The SNS was not created nor designed to respond to a national, or truly global emergency, like the COVID-19 pandemic

• It was designed to be a stopgap for local medical countermeasures and biohazard events

The SNS generally maintains a broad range of medications such as antibiotics, antidotes, and antitoxins, as well as equipment and ancillary supplies such as PPE and surgical equipment

In 2009 the SNS responded to the H1N1 influenza outbreak and depleted its resources of PPE

• Even knowing a resource such as PPE will always be relevant and valuable to any type of emergency, the Obama Administration repeatedly prioritized replenishing the stockpile with other resources

States Must Maintain Their Own Stockpile of Emergency Medical Supplies

• The SNS was established to ensure SLTTs had the adequate number of supplies in the face of a fast-moving emergency as a "short-term, stopgap buffer"

• It was not established to, or even capable of, responding to a national crisis

• State-maintained stockpiles would ensure states could deploy resources at a faster timeline and have guaranteed access to assets

The United States' Unsecure Supply Chain Risks A Future Failed Pandemic Response

The United States Must Reduce Its Reliance on Other Countries, Particularly China, for Pharmaceuticals and Medical Supplies

• Many of the medications taken by Americans are manufactured overseas, and the active ingredients in these medications, the chemical compounds used to make them, are overwhelmingly made in China

• In 2018, China accounted for 95 percent of U.S. imports of ibuprofen, 91 percent imports of hydrocortisone, approximately 40 percent of penicillin, and 70 percent of acetaminophen

The United States Must Implement Policy Changes to Strengthen its Medical and Pharmaceutical Supply Chains

• Companies should be required to alert the FDA about supply chain disruptions outside of public-health emergencies

• Drug labels should be required to identify the original manufacturer and specify reliance on different manufacturers for APIs

Rapidly Implemented Travel Restrictions Can Save Lives

International Travel Restrictions Delayed the Spread of COVID-19 Early in the Pandemic

• The travel restrictions targeting Asia and Europe during the early days of the COVID-19 pandemic were effective in delaying the spread of the virus into the U.S.

• One study estimated that the U.S. travel bans helped to prevent approximately 77,000 cases of COVID-19 in the first month of their implementation

But for the Chinese Communist Party Blatantly Downplaying and Lying Concerning the Serious Threat Posed by COVID-19, Travel Restrictions Would Have Been Imposed Earlier and Been More Effective

• The CCP failed to notify the WHO of the outbreak in a timely manner and subsequently concealed valuable information—harming the global response and leading to unnecessary illness and death

• If the CCP had signaled the international community of an outbreak of concern before Christmas in 2019, travel restrictions targeting Asia could have been implemented earlier

Government Perpetrated COVID-19 Misinformation

Public Health Officials Incorrectly Characterized the Lab-Leak Theory as a "Conspiracy Theory"

• Dr. Fauci played a critical role in disparaging the lab-leak theory, appearing alongside Dr. Daszak on a podcast and stating the theory was "conspiracy theories without any scientific basis"

• Evidence suggests that Dr. Fauci "prompted" the drafting of the Proximal Origin paper to "disprove" the lab-leak theory

The Biden Administration Employed Undemocratic and Likely Unconstitutional Methods to Fight What It Deemed to Be Misinformation

• Major technology companies changed their content moderation policies in response to pressure from the Biden White House, censoring posts related to the lab-leak theory and other COVID-19 topics

• This represented an attempt by the government to control the speech of millions of Americans, which undermines the very character of our democracy

The Biden Administration and Many Public Health Officials Exaggerated the Power of COVID-19 Vaccines

• President Biden, Dr. Walensky, and Dr. Fauci made false statements implying the vaccines were highly effective at preventing infection and transmission

• These exaggerations likely contributed to Americans' confusion about COVID-19 vaccines and reduced overall vaccine confidence

The U.S. Food and Drug Administration and Other Public Health Officials Falsely Implied that Ivermectin Was Only for Horses and Cows

• The FDA's tweet stating "You are not a horse. You are not a cow. Seriously, y'all. Stop it." was misleading, as Ivermectin is FDA approved to treat certain parasites in humans